Abstract Systemic sclerosis (scleroderma; SSc) is a chronic connective tissue disease in which lung fibrosis is the most frequent cause of death. SSc and idiopathic pulmonary fibrosis are the two most common disease that falls under the interstitial lung diseases (ILD), a grouping of devastating diseases in which lung fibrosis leads to progressive shortness of breath, a very poor quality of life, and death within a few years. Autologous local Mesenchymal Stem Cell (MSC) injections have been shown to have a short-term beneficial effect on SSc patients by healing ulcers, returning feeling to the fingers, and enhancing facial skin elasticity and the ability to open and close the mouth. In contrast, beneficial effects of MSC therapy on lung fibrosis have not been reported. Caveolin-1 is a promising therapeutic target in fibrotic diseases. The effects of caveolin-1 deficiency in cells and in animals can be reversed using the Caveolin-1 Scaffolding Domain Peptide (CSD). We have shown that many cell types from SSc patients (fibroblasts, monocytes, MSCs) are deficient in caveolin-1 leading to collagen overexpression by fibroblasts; hypermigration by monocytes; and myofibroblast differentiation at the expense of adipocyte differentiation by MSCs. We have shown analogous effects in a mouse model in vivo. CSD has beneficial effects on lung and skin fibrosis including reversing the thinning of the subcutaneous fat layer (this thinning is also observed in SSc patients). Recently, we have shown that the beneficial effects of MSCs and full-length CSD on lung fibrosis are synergistic and that, subdomains of CSD are as effective as full-length CSD in various in vitro and in vivo assay. Based on these studies, we will: Aim 1: Identify a subdomain of CSD (lead compound) with the same activity as full-length 20-amino acid CSD in synergizing with MSC therapy in having a beneficial effect on lung fibrosis. Aim 2: Develop stability, solubility, and pharmacokinetic data for each candidate subdomain to determine if any of these peptides has significant advantages over the others. These studies will help predict a human dose level and the safety margin we will have in human studies. In summary, the improvements in MSC therapy that will result from the completion of this project will have great commercial potential because of their ability to enhance the quality of life and lifespan of SSc patients.